EV Price Parity Is Already Here, So Where’s the Tipping Point?

The Chevy Bolt is an affordable long-range EV. But maybe price parity isn't enough to move the EV market?

We are approaching the tenth anniversary of the so-called modern electric car. The first sales of the Nissan LEAF, which at the time offered 84 miles on a single charge, were made in December 2009. A decade later, the LEAF goes nearly three times as far for about the same price. But EV sales still represent less than 2 percent of total vehicle sales in the United States.

Analysts have long predicted that EV sales would hit a tipping point as soon as battery-electric cars are offered with the same range and price as internal-combustion vehicles. And yet, EV sales remain in the low single digits despite the availability of five different electric vehicles with at least 225 miles of range at a price (before incentives) of about $36,000.

That’s a decent margin below the average U.S. transaction price for a passenger vehicle of about $37,500. After EV incentives, the cost of those five affordable EVs drops below $30,000 (and in some states to about $27,000). The list of those price-parity electric cars includes the Nissan LEAF Plus, Chevrolet Bolt, Kia Niro EV, Kia Soul EV, and the 258-mile Hyundai Kona Electric.

Of course, true price parity should compare vehicles with nearly identical characteristics. Yes, you can buy a capable, quick, and silent EV for the same price as a theoretical average gas car. But a gas-powered Hyundai Kona with roughly the same creature comforts costs at least a few thousand dollars less than a Kona EV—after EV incentives.

The 2 percent sales level begs the question of why EV sales have barely budged despite the sensational success of the Tesla Model 3, which represents nearly half of EV sales so far in 2019. Tesla did it! Elon delivered the company’s affordable EV model. Tesla fanboys would say it’s the only EV worth considering. In California, EV sales are 5.6 percent of the market, with Tesla representing 4.2 percent by itself. However, not every EV can be a Tesla.

A more serious evaluation requires some soul-searching by EV advocates. And it should give pause to industry leaders like Reinhard Fischer, senior vice president for Volkswagen Group. Fischer gives the impression that price parity is already here. A couple of weeks ago, he said, “When you put pencil to paper, owning a full-electric vehicle costs about half of what a gas car costs me to operate.” That's been true from the beginning.

Scott Keogh, chief executive of the Volkswagen Group of America, in January also said the tipping point was near. His stance is apparently based on a feel-good theory. He said, “I’m a firm believer [because people] are going to feel they’re driving the future.” Keogh compared the desire for EVs to the desire for consumers wanting to get into a cool nightclub or restaurant.

Okay, there’s already a cool factor for some EVs, price parity is almost here, and lower cost of ownership is already well established. Then why are we not already seeing dramatic increases in EV sales? Lack of vehicle choice? Slow charging times? Fear of the unknown? Elon's global takeover of the auto industry are not yet realized?

Statements from analyst firms suggest that we just need a little more patience. McKinsey, the consulting firm, said in February than EVs won’t be cheaper to own until the “early 2020s.” In March, Autotrader pegged price parity to occur by 2025—a timeline matching Bloomberg New Energy Finance’s forecast of parity in the mid-2020s. And even Nissan, the maker of the LEAF, said price parity won’t happen until 2024.

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